arbiter
JournalsAccount

Optimal design of fixed and variable costs in peer-to-peer insurance with heterogeneous risk

Tim J. Boonen et al.

ASTIN Bulletin2025https://doi.org/10.1017/asb.2025.10065article
AJG 2ABDC A*
Weight
0.41

Abstract

This paper examines the optimal design of peer-to-peer (P2P) insurance models, which combines outside insurance purchases with P2P risk sharing and heterogeneous risk. Participants contribute deposits to collectively cover the premium for group-based insurance against tail risks and to share uncovered losses. We analyze the cost structure by decomposing it into a fixed premium for outside coverage and a variable component for shared losses, the latter of which may be partially refunded if aggregate losses are sufficiently low. We derive closed-form solutions to the optimal sharing rule that maximizes a mean-variance objective from the perspective of a central or social planner, and we characterize its theoretical properties. Building on this foundation, we further investigate the choice of deposit for the common fund. Finally, we also provide numerical illustrations.

2 citations

Open via your library →

Cite this paper

https://doi.org/https://doi.org/10.1017/asb.2025.10065

Or copy a formatted citation

@article{tim2025,
  title        = {{Optimal design of fixed and variable costs in peer-to-peer insurance with heterogeneous risk}},
  author       = {Tim J. Boonen et al.},
  journal      = {ASTIN Bulletin},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1017/asb.2025.10065},
}

Paste directly into BibTeX, Zotero, or your reference manager.

Flag this paper

Optimal design of fixed and variable costs in peer-to-peer insurance with heterogeneous risk

Flags are reviewed by the Arbiter methodology team within 5 business days.

Evidence weight

0.41

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.25 × 0.4 = 0.10
M · momentum0.55 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.